Tax Competition and EU Law

Sovereign states commonly use tax incentives in order to attract investment and capital from abroad. Although it has been recognized for many years that the forms and features of these incentives can often have harmful effects, there has not until now been a clear, in-depth, full-scale study of what these effects are, how they come about, and how they can be minimized or avoided. Within this volume, Carlo Pinto crystallises the extensive European and American literature in the field, locating his legal analysis in an EU law context that offers a framework within which tax lawyers in both government and business can find common ground. This volume builds an authoritative synthesis and proposal in its detailed discussions of all aspects of the theory and practice of tax competition, including the following: evidence of interjurisdictional tax competition in the US experience and what the EU can learn from it; methodologies to study tax competition; economic evidence of tax competition in Europe; Member States' "benchmark" tax systems; internal market distortion provisions of the EU Treaty (Articles 96 and 97) and relevant EMU provisions. It also examines the: applicability of state aid provisions (EC Treaty Article 87) to direct tax measures; the EU "Code of Conduct" Group; OECD countermeasures against harmful tax competition; and CFC legislation. In the course of his presentation the author analyses various tax regimes and court cases from most EU Member States, outlining the issues and clarifications each brings to the central questions. His final proposal demonstrates that the beneficial effects of tax competition - decrease in direct tax burden, improved efficiency in public administration, enhancement of employment and development - need not be fraught with the risk of fiscal degradation. This is a significant development in the success of the projected harmonisation of taxation in the European Union.